The attack came as diplomats, including U.S. Secretary of State Hillary Rodham Clinton, shuttled around the region to try to broker a cease-fire following a weeklong Israeli offensive against Palestinian militants in Gaza that has killed more than 130 Palestinians. Militant rocket fire into Israel has killed five Israelis.

This, as thousands of Israeli ground troops massed on the Gaza border and awaiting a possible order to invade.

The bus exploded about noon on one of the coastal city's busiest arteries, near the Tel Aviv museum and across from an entrance to Israel's national defense headquarters.

The bus was charred and blackened, its side windows blown out and its glass scattered on the asphalt. The wounded were evacuated and blood was splattered on the sidewalk.

An Israeli driver who witnessed the explosion told Army Radio the bus was "completely charred inside." Another witness said there were few passengers on the bus when it exploded. The witnesses spoke to Israeli TV and were not identified.

Police spokesman Micky Rosenfeld said authorities were investigating whether the bomb had been planted and left on the bus or whether it was the work of a suicide bomber.

"We strongly believe that this was a terror attack," he said.

He said that of the 10 wounded, three were moderately to seriously hurt.

More than 1,000 Israelis were killed during the violent Palestinian uprising in the last decade in bombings and shooting attacks. More than 5,000 Palestinians were killed as well.

The last bombing in Tel Aviv was in April 2006, when a Palestinian suicide bomber killed 11 people at a sandwich stand near the city's old central bus station. A bomb left at a bus stand in Jerusalem last year killed one person.

In Gaza, the Tel Aviv bombing was heralded from mosque loudspeakers, while Hamas' television interviewed people praising the attack as a return of militants' trademark tactics.

There was no claim of responsibility from Hamas or Islamic Jihad.

Clinton pressed on Wednesday with efforts to wring an elusive truce deal from Israel and Gaza's militant Hamas rulers, after earlier attempts to end more than a week of fighting broke down amid a furious spasm of violence.

She joined other world diplomats in shuttling between Jerusalem, the West Bank and Cairo, trying to piece together a deal that would satisfy the two foes after a week of fighting and mounting casualties.

After meeting with Israeli Prime Minister Benjamin Netanyahu in Jerusalem Tuesday night, Clinton conferred with Palestinian President Mahmoud Abbas in the West Bank on Wednesday morning and was to travel later in the day to Cairo, which is mediating in the crisis.

About 60 demonstrators, riled by Washington's support for Israel, rallied in Ramallah as Clinton arrived for talks with Abbas. She left the city without comment.

The two sides had seemed on the brink of a deal Tuesday following a swirl of diplomatic activity also involving the U.N. chief and Egypt's president. But sticking points could not be resolved as talks -- and violence -- stretched into the night.

One blast blew out the windows of the hotel room where CBS News correspondent Charlie D'Agata was staying in Gaza City.

At least four strikes within seconds of each other pulverized a complex of government ministries the size of a city block, rattling nearby buildings and shattering surrounding windows. Hours later, clouds of acrid dust still hung over the area and smoke still rose from the rubble.

The impact of the blast demolished the nearby office of attorney Salem Dahdouh, who was searching through files buried in the debris.

"Where are human rights?" he asked, saying officials negotiating a cease-fire ought to see the devastation.

In downtown Gaza City, another strike leveled the empty, two-story home of a well-known banker and buried a police car parked nearby in rubble.

"This is an injustice carried out by the Israelis," said the house's caretaker, Mohammed Samara. "There were no resistance fighters here. We want to live in peace. Our children want to live in peace. We want to live like people in the rest of the world."

Medics said an area child was killed, raising the Palestinian death toll to at least 138. Five Israelis have also been killed by Palestinian rocket fire, which continued early Wednesday.

The Israeli military said its targets included the Ministry of Internal Security, which it says served as one of Hamas' main command and control centers, a military hideout used as a senior operatives' meeting place and a communications center.